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Street punishes Google Q2

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Google reported a profit that was less than what Wall Street was expecting and its shares sunk dramatically in after-hours trading Thursday.

Google said it earned $1.25 billion in the second quarter, up from $925 million in the same frame a year ago. Adjusted for certain items, that comes to $4.63 per share, 11 cents shy of what analysts were expecting.

Revenue rose 39% to $5.37 billion. The more important revenue figure, which strips out traffic acquisition costs, came to $3.9 billion, which matched expectations.

Google shares, which were down fractionally to $533.44 in regular trading, briefly plunged $60 per share in after-hours trading before recovering a bit, down just $41, or 8%.

Google executives said the disappointing results can be traced to the line item it calls "other income and expenses," which shrunk from $137 million last year to just $58 million this year, in part because of costs associated with its acquisition of DoubleClick.

During a conference call with analysts, CEO Eric Schmidt defended the nonexclusive advertising deal it struck with Yahoo that is coming under scrutiny on Capitol Hill.

Also on the call, co-founder Sergey Brin said 13 hours of video are uploaded to YouTube, which Google owns, every minute.

Executives also praised Lionsgate, a "Forbidden Kingdom" distributor, for striking a deal announced Wednesday where users can post clips of Lionsgate films to YouTube with Lionsgate and YouTube sharing advertising revenue from the initiative. (partialdiff)